What Is “Power of Attorney”?

A power of attorney is a legal document granting someone you trust the
ability to make decisions and conduct business on your behalf. In the
event that you become unable to manage your investments on your own, it
can become necessary to have a power of attorney step in.

Granting someone the power of attorney is not a decision you should take
lightly. You should always be cautious when giving another person the
ability to control your money. The most important qualification for a
power of attorney over your investment accounts is that they should be
someone you trust completely. They should understand your investment goals
and objectives, including how you would like your assets to be managed
in the future to provide for yourself and your family.

Although you don’t have to choose a financial expert, it will be
helpful if your agent has some knowledge about investments – enough
to make decisions and communicate effectively with your financial adviser.
A power of attorney should specify the type of authority you are granting,
what you still want to control, and how long the power of attorney designation
will last.

The authority granted in a power of attorney for your investment can include
anything from limited trading authority in a brokerage account, to total
control over the decisions related to your investment portfolio and finances.

Another tip is to talk to your broker or financial institution. Oftentimes,
a brokerage firm will have its own power of attorney form or its own specific
requirements. Also, power of attorney arrangements often terminate upon
your death, so make sure you also have considered what will happen to
your investment assets and other finances when you pass away.

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